RE LAM FAI YUEN t/a TUNG KWONG CO

HCMP 2167/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2167 OF 1996

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J U D G M E N T

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INTRODUCTION

1. This is an application by notice of Originating Motion to rectify the register of trade marks by the removal of the Device in the Respondent's trade mark No. 2200 of 1991 "Wowi and device". The Respondent's mark is at Exhibit "K" of the Exhibits Bundle (1) at pp. 242-3. The device, against which the complaint is directed, is the alphabet W in script, with a dot over the middle stroke or above the inverted alphabet V.

2. The Applicant's device is the alphabet M in script, with a dot below the middle stroke or beneath the V.

3. The Applicant is Mila Sch?n Group SpA, an Italian joint stock company. The Respondent is Lam Fai Yuen trading as Tung Kwong Company, a sole proprietorship.

4. The application is made under section 48 of the Trade Marks Ordinance, Chapter 43 of the Laws of Hong Kong. This section vests in the Court a discretion to expunge or vary any entry made in the register without sufficient cause or wrongly remaining on the register upon the application of any person aggrieved by such entry.

5. The Applicant relies on the grounds set out in paragraphs (1) and (3) of the Notice of Originating Motion, namely lack of proprietorship on the part of the Respondent under section 13(1) and on likelihood of deception of the Respondent's device under section 12(1) of the Trade Marks Ordinance. The Applicant says it is a person aggrieved because its own application to register its trade mark "Mila Sch?n and Device" in Class 34 has been blocked by the Respondent's registration.

THE BACKGROUND

6. The Applicant and its predecessors in business have together carried on business as designers, makers, sellers and suppliers of garments and fashion accessories since about 1958. This business was transferred to the Applicant on the 1st January 1994.

7. The mark "Mila Schön and Device" was first used by the Applicant and its predecessors in business in Italy in the 1970's. It has been used in other countries throughout the world, including Hong Kong, and is registered in many of them, including Hong Kong, in a number of classes; and in some countries including Class 34 or its local equivalent.

8. The Device was designed by Mrs Mila Schön and has been registered by the Applicant separately in a number of countries.

9. Sales of products bearing the "Mila Schön and Device" or the Device alone, according to the Applicant, have been substantial and the Applicant says that the marks have become distinctive of its products. As against that, the Respondent says that there is really very little evidence of the user of the Device in Hong Kong and, in any event, the unparticularised sales and advertising figures date only from 1990 so that they cannot be of much assistance as the material date in this case is April 1990. The same point applies, says Mr Liao for the Respondent, to the other documentary and advertising material. There is at most very sketchy evidence of their having had circulation or user in Hong Kong as of April 1990.

10. There is substance in these observations.

11. Nonetheless, Mr Morita for the Applicant says in his evidence that the marks "Mila Schön and Device" and the Device have been used in Hong Kong since 1987. Invoices, including a late affidavit handed up this morning, relating to such use are in the Exhibits. In the earlier Exhibits in Bundle H, there are three relevant invoices predating April 1990 dealing with in total about 600 items which had been sold in Hong Kong. They cover clothes, belts and key pockets, not cigarette lighters. They were all sold to one address in Caxton House and there is no evidence as to what this company in Caxton House did with these items. The affirmation handed up this morning exhibits other invoices, dealing with a total of some 3,900 pieces, also sold to the same address in Caxton House. The same observations as to what happened to them thereafter apply to these items as well. Examples of current packaging materials and labels bearing the marks have also been produced in Exhibit "I", but these are current examples and they do not have much relevance as to what was available in Hong Kong as of April 1990.

12. On the 26th June 1991, the Applicant applied to register the "Mila Schön and Device" mark in Class 34 by application No. 4398 of 1991. This application was blocked by the Respondent's trade mark No. 2200 of 1991, which was applied for on the 11th April 1990.

PERSON AGGRIEVED

13. This expression has been liberally and generously construed in the authorities to cover any person with a genuine interest in having a mark removed, including trade rivals over whom an advantage may be gained by the mark remaining registered, is a person aggrieved for these purposes. The position is helpfully analysed and summarised by Leonard, J. in GAY GIANO TM [1996] 2 HKC 646 at 648-651.

14. In the present case, it seems clear that the Applicant is a person aggrieved. It has made an application which cannot go ahead because of the Respondent's registration. It is seeking registration in respect of goods which are naturally allied to and extend from the goods in respect of which it has already used the mark in Hong Kong and in respect of which it has already used the mark elsewhere. As Leonard, J. took judicial notice in the GAY GIANO case at p. 651, it is well known that owners of famous trade marks in the fashion industry apply their marks to other fashion items. I, too, am prepared to notice this phenomenon judicially.

15. Mr Liao did not contest the Applicant's status to take these proceedings, although he makes the point that the Respondent does not object to the Applicant's trade mark application and that it was the Registrar of Trade Marks who, as a result of the Respondent's registration, objected to the Applicant's application going ahead.

PROPRIETORSHIP

16. Only a person with a valid claim to be the proprietor of a trade mark can register it. Section 13(1) of the Trade Marks Ordinance provides:

"Any person claiming to be entitled to be registered as the proprietor of a trade mark used or proposed to be used by him who is desirous of registering it must apply in writing to the Registrar in the prescribed manner for registration in either Part A or Part B of the register."

THE MAXIM'S DECISION

17. The question of proprietorship was examined by Hunter, J. in Hong Kong Caterers Ltd v. Maxim's Ltd [1983] HKLR 287. This is what his Lordship said at p. 297 H - 299 B:

"Section 13(1)

Here there is no legislative difference. Section 13(1), and the U.K. equivalent s. 17(1) both provide:

'Any person claiming to be the proprietor of a trade mark used or proposed to be used by him, who is desirous of registering it must apply in writing to the Registrar in the prescribed manner ....'

The applicants claim to have used their mark since 1967. I am therefore not concerned with the particular problems which have arisen under this section in the U.K. in the prospective user cases e.g. knowledge or negligence. The cases seem to me to support the following propositions namely:-

(1) This sub-section requires the claimant not only to claim to be but in fact to be 'the proprietor', and if challenged to prove this assertion.

(2) Proprietor here means one who has 'the exclusive right to the use of the trade mark in relation to' the goods in question, see s. 4 of the ordinance.

(3) The purpose of the trade mark legislation is to give the applicant an improved remedy, to confirm him in a monopoly he in fact enjoys; not to create one which does not then exist; see the legislative history set out in the G.E. Trade Mark case at page 324.

(4) This suggests that the vital question is one of fact namely did the applicants on 8th January 1971 have and enjoy a monopoly in the use of the name 'Maxim's' in relation to bakery products.

This propositions seem to me to be consistent with the reasoning in the cases collected by Kerly under paragraphs 4-02 to 4-04 particularly Vitamins Ltd. Application [1956] RPC 1 and Brown Shoes Co. Application [1959] RPC 29. It is also consistent with the view expressed in Kerly in paragraph 4-03:

'It is difficult to see what objection there can be to a claim to proprietorship of a mark which is not in use and has no reputation in this country.' (Emphasis added).

The Assistant Registrar found that the applicants had established their claim to proprietorship. He read the authorities, particularly the two above referred to, as requiring an opponent to have asserted his proprietorship and he concluded on the facts that the opponents had failed to do this. In these two cases both Llyod Jacob, J. and Wynn Parry, J. referred to an assertion of proprietorship. But both judges were dealing with a 'proposed to be used' not a 'used' case. The need for an assertion in relation to proposed user is understandable. It is much less obvious to me why it should be necessary in an actual user case. In the Vitamin's case Lloyd Jacob, J. himself used these words: 'the person putting forward the application should be in possession of some proprietary right which if questioned can be substantiated'. It would seem to me sufficient for an opponent to show that he enjoys an existing reputation in the mark applied for in relation to the relevant goods, because the applicant would not then be the proprietor for the purposes of the ordinance. Some prior assertion may assist in proof of this: but I do not see why it should be essential to it. If this be right then on the Assistant Registrar's findings the applicants were not proprietors. He reached the conclusion, with which I agree, that a body of persons existed in Hong Kong who associated the name Maxim's with the opponents excellence in meals which association necessarily covers items like pastries and confectionery. In my judgment therefore the applicants simply failed to substantiate the proprietary right claimed.

But if I am wrong in this I also think that there was sufficient evidence in this case of an assertion of proprietorship. When this concept was probed in argument, it emerged, and Mr. Jeffs agreed, that quite slight conduct sufficed provided that the person making the assertion could be seen to be saying (in Mr. Jeffs' words) 'this is my mark'. Mr. Jeffs expressly disclaimed any need for publicity in relation to this assertion. He thereby seemed to me to be accepting the validity of this dictum of Williams, J. in Seven Up Co. v. O.T. Ltd. [1947] 75 CLR 203, 211, cited with approval in the Pioneer case at page 430.

'The court frowns upon any attempt by one trader to appropriate the mark of another trader although that trader is a foreign trader and the mark has only been used by him in a foreign country. It therefore seized upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia. It is not then a mark which another trader is entitled to apply to register under the Trade Marks Act because it is not his property but the property of a foreign trader.'

During the event at the Mandarin Hotel the opponents sold meals under the name and mark of Maxim's. Such sales must have included bakery products. In this way the opponents were asserting their proprietorship in the name. The same observations apply to the supplies to Pan-Am in and out of Hong Kong Airport. The sales of wine and the listing of wines under the Maxim's name support the association with excellence. In this context quantities are not significant or alleged to be significant. These steps seem to me sufficient to kindle the legend: to stimulate and maintain the opponent's repute in Hong Kong. In my judgment, if such is necessary, they constitute a sufficient assertion of proprietorship."

THE APPLICANT'S SUBMISSION ON PROPRIETORSHIP

18. In short, as Mr Garland puts it in his skeleton submissions, the question is whether the person claiming to be proprietor had and enjoyed a monopoly in the use of the mark in relation to the relevant goods at the material date. In this case, that date is the 11th April 1990 the date from which the Respondent's registered trade mark took effect. Hunter, J. held it sufficient for an opponent or, as in the present case, the Applicant for rectification, to show that he enjoyed an existing reputation in the mark in relation to the relevant goods at the material time.

19. In the present case, Mr Garland says that the Applicant had an existing reputation in the device mark in Hong Kong and overseas. It has been used in Hong Kong since 1987 and overseas since earlier than that. Some of the overseas use had been in neighbouring countries from which, Mr Garland reminds me, Hong Kong has many visitors such as Japan, Singapore, Malaysia and Thailand. Furthermore, the use had been in relation to garments and fashion accessories, goods to which, he says, cigarette lighters can in this day and age be said to be allied and of which they may even be a natural extension.

THE CHALLENGE TO PROPRIETORSHIP : THE RESPONDENT'S RETORT

20. Mr Liao launched a full frontal attack on the Applicant's challenge to the Respondent's claim to proprietorship. He takes a number of points.

21. First, he asserts that such a challenge can only be mounted where it is shown by the Applicant that the Respondent has appropriated or misappropriated the Applicant's mark.

22. Mr Liao had to backtrack somewhat after considering QUIET MAY TRADE MARK, [1966] FSR 27 and AL BASSAM TRADE MARK, [1995] RPC 511 from which it is clear that any claim to proprietorship has to be determined as a matter of legal right and that that in turns depends on first use. See the observations of Morritt, LJ at pp. 523-524 and Ward, LJ at p. 527.

23. Bona fides may of course be a relevant consideration, but it is certainly not, as Mr Garland says, the touchstone of proprietorship. Further, the lack of bona fides on the part of an applicant for registration may well be a ground for denying a valid claim to proprietorship.

24. In the end, Mr Liao seemed prepared to accept that for hitherto unused marks, independent creation is relevant and may even be determinative in negating an opposition to proprietorship, but for marks which have been in use, a later user, with no knowledge of a previous user, would have grave difficulties, probably fatal difficulties, in showing proprietorship.

25. Secondly, Mr Liao says that the question of proprietorship simply does not arise where the marks are not identical or virtually identical. He refers to a number of Australian authorities to some of which I will have to turn. Before I do so, I note Mr Garland's argument that on the question of proprietorship, I have to concentrate not on the whole mark as registered by the Respondent, namely "Wowi and device" but only the device alone. He makes the point that unless that were the case, it would be unreal and he sought to distinguish the Australian cases by reference to the factual situation considered in them. This is a point of some difficulty and I see the force of Mr Garland's submission, but the Australian authorities appear to be against him and I also note that section 13 refers to "the proprietor of a trade mark" whereas section 12, for instance, refers also to "part of a trade mark". This is no more than a hint, but perhaps a not insignificant one. Unless one is the proprietor of the whole trade mark, one cannot seek registration. For proprietorship, it seems logical to consider the whole mark since the claim has to be to the whole. To separate a mark into different components is not usually a sensible way of establishing derivation, confusion or similarity since in trade mark law, as in other areas, the whole is often more than the sum total of the parts. On that note, I turn to the Australian authorities.

THE AUSTRALIAN AUTHORITIES ON PROPRIETORSHIP

26. The first one to which Mr Liao referred to is Tavefar Pty. Ltd. v. Life Savers (Australasia) Ltd. (1988), 12 IPR 159. I do not propose to trouble with the facts and I can go straight to p. 166 of the judgement of the Senior Assistant Registrar Mr Hardie, and the passage can be found between Lines 20 and 30 as follows:

"I find that on 25 March 1983, the opponent was the proprietor of the mark ZOOPER DOOPER in respect of water ices. At that date it had no use of the mark on any other goods and proprietorship of the mark ZOOPER DOOPER for any goods other than water ices has not been established. The opponent however has not used the mark DOOPA. Accordingly I find that it has established no case for proprietorship of that mark nor has it proved that the applicant is not the proprietor. The opposition based on s 40(1) therefore fails."

The next case is Bodyline Cosmetics Ltd. v. Brot Bodyline (1993) 27 IPR 315, and again I go straight to the passage in question at p. 319:

"The concept of proprietorship of a trade mark was explained by McGarvie J at first instance in Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd (1987) 10 IPR 402 at 413:

Acquiring proprietorship

At common law (which in the present context is treated as including the principles of equity), property in a trade mark could only be acquired by public use of the mark as a trade mark. The right of the proprietor of a trade mark was to prevent its use as a trade mark by other persons. The original remedy for the protection of this right was an injunction to restrain infringement. Principles as to the way in which the discretion should be exercised to protect a trade mark by injunction were settled by the Court of Chancery. The cases which settled these principles established the types of trade marks in which a person would be recognised as having a right of property which would be protected by injunction: G E Trade Mark [1973] RPC 297 at 324-7 per Lord Diplock.

The basic common law principle is that the first person who uses a trade mark of an appropriate type within a country becomes the proprietor of the mark there: Re Registered Trade Mark 'Yanx'; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 203; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 603; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 59 ALJR 77 at 83. A person who becomes proprietor of a trade mark in this way is entitled at BODYLINE common law to restrain a person who later commences to use the trade mark.

The proprietor is not entitled to restrain a later user who is an honest concurrent user of the trade mark. For example, a person who innocently commences to use the trade mark, unaware that this infringes the proprietor's right is an honest concurrent user. At common law neither the proprietor nor the honest concurrent user could restrict the other from using the trade mark, but each could restrain a usurper who used the mark: G E Trade Mark, supra, at 326....

In considering who, within s 40(l) of the Act, was at the time of Settef's application for registration the proprietor of the trade mark, one considers who at common law was the proprietor in Australia: The Shell Co of Australia Ltd v Rohm & Haas (1949) 78 CLR 601 at 625 and 627. Settef claims to be the first person to have used the trade mark in Australia and therefore to have been proprietor at common law in Australia.

Use of the trade mark by Settef overseas gave it no right to proprietorship in Australia. Any use at all in Australia gave it that proprietorship: the Thunderbird case (1974) 131 CLR 592 at 600.

However, for the question of proprietorship to arise at all the parties must be claiming the same mark or at least marks which are so nearly identical as to be virtually the same mark: Kendall Co v Mulsyn Paint and Chemicals (1963) 109 CLR 300; Tavefar Pty Ltd v Life Savers (Australasia) Ltd (1988) 12 IPR 159. The question is not whether the marks are so alike as to be deceptively similar, which is obviously a relevant consideration under ss 28 and 33. In deciding whether the marks are substantially identical I think I am entitled to compare the marks side by side. This would seem to follow from what the High Court has said in relation to the question whether conflicting marks are substantially identical in terms of s 33: Shell Co (Aust) Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407. I think it is clear when the applicant's and opponent's marks are compared side by side that there are very obvious differences to the extent that it cannot be said that they are the same mark or so similar as to be in effect the same mark. The opponent's mark consists of the word BODYLINE alone while the applicant's consists of the three words THE BROT BODYLINE. While the presence of the definite article in itself would not be enough to differentiate the two marks, the addition of a third word, which appears moreover to be an invented and meaningless word, does clearly make that mark a different mark. It is well established that in general the first part of a mark is the most important for the purpose of comparison: In the Matter of London Lubricants (1920) Ltd's Application to Register a Trade Mark (1925) 42 RPC 264. It follows that in the present case the opponent cannot claim to be the proprietor of the mark in suit."

Next is Vamuta Pty. Ltd. (t/a SOGO JEWELLERS) v. SOGO Co. Ltd. (1995) 31 IPR 557. The relevant passage is at pages 562-563, where Kendall Co v. Mulsyn Paint & Chemicals and Tavefar v. Life Savers are referred to:

"Section 40: proprietorship

The provisions of s 40, so far as is relevant here, are that:

A person who claims to be the proprietor of a trade mark may make application to the Registrar for registration of that trade mark in Part A or Part B of the Register.

On that subject, McGarvie J said in Settef SpA v Riv-Oland Marble Co (Vic) Pty Ltd, supra, at 413:

The basic common law principle is that the first person who uses a trade mark of an appropriate type within a country becomes the proprietor of the mark there: Re Registered Trade Mark "Yanx"; Ex parte Amalgamated Tobacco Corp Ltd ( 1951 ) 82 CLR 199 at 203; Thunderbird Products Corp v Thunderbird Marine Products Pty Ltd (1974) 131 CLR 592 at 603; 4 ALR 687 at 695; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 3 IPR 545 at 556; 59 ALJR 77 at 83.

. . .

In considering who, within s 40(1) of the Act, was at the time of Settef's application for registration the proprietor of the trade mark, one considers who at common law was the proprietor in Australia: Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601 at 625 and 627.

In other words, the first user of a mark in Australia (for relevant goods or services and prior to the date of application) becomes the proprietor at common law. That proprietorship, however, is limited to 'the same kind of thing', as per Holroyd J in Re Hicks' Trade Mark, supra. Any small amount of use will suffice, but the effect of the act relied on to constitute use must be the creation, in the minds of those concerned, of an impression that the goods or services of a particular trader are being offered for sale in Australia.

I am not concerned, in deciding the issue of proprietorship, with the question whether the opponent's and applicant's marks are so alike as to lead to the deception or confusion of customers. That question is relevant in relation ss 33 and 28, but no to s 40, which only applies when the marks are identical or so similar as to be virtually the same mark: Kendall Co v Mulsyn Paint & Chemicals (1963) 109 CLR 300; Tavefar Pty Ltd v Life Savers (Australasia) Ltd (1988) 12 IPR 159."

The next passage in Vamuta is at p. 564:

"However, in the case of No 504073, the applicant's mark also contains the device of a triangle or an inverted hourglass within a circle. I consider that this combination of word and device comprises a trade mark which is sufficiently different from any mark which may have been shown to be used by the opponent in its evidence. I therefore think that this mark is one where no prior use has been shown by the opponent before the date of the present application. On the other hand, the applicant has fulfilled the criteria of authorship, intention to use, and application for registration mentioned by Dixon J in Shell Co of Australia Ltd v Rohm & Haas Co, supra, sufficient to lay claim to the mark's proprietorship. Therefore, it would seem to me that, in the case of the mark covered by application No 504073, the applicant is entitled to be considered the proprietor in terms of s 40 of the Trade Marks Act.

Given the foregoing, I find that, in the case of application No 504071, for registration of the mark SOGO, the opponent has shown that it was the first user and therefore the proprietor of the mark for, specifically, the sale of opal jewellery. This does not, however, displace the applicant's claim to proprietorship of the mark for any other services as shown in the specification. In the case of No 504073, for registration of the mark SOGO and the device of a triangle or an inverted hourglass within a circle, the opponent has failed to show first use and therefore the applicant is entitled to proprietorship of that mark for the services listed in the specification."

The last case on this point to which Mr Liao referred is Sizzler Restaurants International Inc. v. Grater Seven Pty. Ltd. (1997) 38 IPR 201. The relevant passage is at 208:

"Proprietorship: s 40

It has been established that, in order to pursue a valid claim to proprietorship, it is essential that no one else has acquired a prior right, through use, of the mark in Australia. In Re Hicks' Trade Mark (1897) 22 VLR 636 Holroyd J stated at 640:

In order to substantiate his application to be placed on the register for this word he must have claimed to be the proprietor, and the word 'proprietor' must be taken to mean the person entitled to the exclusive use of the name. If there is anyone else who would be interfered with by the registration of the word 'Empress' in the exercise of a right which such person has already acquired to use the same word in application to the same kind of thing, then Hicks ought not have been put on the register for that trade mark.

This principle has been approved in a number of High Court cases: Blackadder v Good Roads Machinery Co Inc (1926) 38 CLR 332; Seven Up v OT, supra; Shell Co (Aust) Ltd v Rohm & Haas Co (1949) 78 CLR 601; 1A IPR 438; Re Registered Trade Mark "Yanx", Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199.

As explained by D R Shanahan in Australian Law of Trade Marks, supra, under the head 'Non-identical claims to proprietorship', pp 157-9, a question arises as to whether the opponent and the applicant must be claiming substantially the same right to proprietorship. In considering this question, the author concludes that, in order to raise a prior use claim under s 40(1), the parties must be claiming proprietorship of the same or substantially the same mark. The author's views have recently been affirmed by Gummow J in Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 31 IPR 375 at 391; AIPC 91-049 at 38,114:

When the decision is understood in this way, it does not supply any general authority for the proposition that in the case of disputed claims to proprietorship under the present statute anything less than substantial identity between the two marks will suffice. The phrase 'substantially identical', as it appears in s 62 (which is concerned with infringement) was discussed by Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1961) 109 CLR 407 at 414. It requires a total impression of similarity to emerge from a comparison between the two marks. In a real sense a claim to proprietorship of the one extends to the other. But to go beyond this is, in my view, not possible.

See also Karu Pty Ltd v Jose 30 IPR 407; AIPC 91-101 at 38,636."

The marks are then shown and the judgment continues thus:-

"Viewing these marks in light of the test on substantially identical marks enunciated by Windeyer J in Shell v Esso, at 414:

[in] considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison,

in the former, I observe the grotesque devices of a bull, cow and calf and the prominently rendered word 'Sizzler' in bold upper case letters which occupy approximately the same portion in the mark as the group of animals, while the applicant's mark solely consists of the words 'Mexicana Sizzlers'. While none of the elements comprising the marks are identical, what could be seen to be the distinct features, the words 'Sizzler' and 'Sizzlers', respectively, differ in the terminating letter 's' in the applicant's mark. The group of animals in the opponent's mark and the word 'Mexicana' in the applicant's mark, however, create sufficiently dissimilar overall impression for the marks to be easily distinguishable.

Closer resemblance is apparent between the opponent's latter mark SIZZLER and MEXICANA SIZZLERS where the differences lie in the word 'Mexicana' and the plural form of 'Sizzler'. For the purposes of comparison, however, the word 'Mexicana' cannot be ignored, even if it is disclaimed on the registration as a non-distinctive word indicating a particular style or flavour of food, as suggested by Mr Chrysiliou: see Re 'Granada' Trade Mark [1979] RPC 303. This additional word in the applicant's mark is responsible for leaving a total impression in one's mind of a mark which, when the marks are inspected in close proximity, by no stretch of imagination could be regarded as identical or substantially the same mark as that of opponent's registration No 414008.

In view of the legal principles and my observations, as discussed, it is clear that the opponent has not succeeded in relation to the ground of opposition based on proprietorship."

27. I have referred to these passages in extenso as the exact point does not appear to have been considered in Hong Kong or the United Kingdom.

28. Mr Liao also referred me to a leading Australian textbook, Shanahan, Australian Law of Trade Marks & Passing Off 2nd Ed. 1990, at pp. 157-159 and the decision of Gummow, J., then sitting in the Federal Court of Australia, in Carnival Cruise Lines Inc. v. Sitmar Cruises Ltd. (1993) 31 IPR 375 where his Honour gave these issues extensive consideration at pages 384 onwards. The passages germane for our purposes begin at page 390, Line 15:

"The other two submissions direct attention to the circumstances that there is a lack of precise identity between the marks for which Sitmar seeks registration and those in respect of which Carnival is the statutory proprietor, and to the lack of identity in the description of 'services'. In May of the 'proprietorship' cases the bone of contention between the parties has been the same mark. This was so in Hicks (EMPRESS), Blackadder (WINNER), YANX, THUNDERBURD and Aston v Harlee Manufacturing Co, supra, (TASTEE FREEZ). There is some suggestion in The Seven Up Co v OT Ltd (1947) 75 CLR 203 at 207, 215, 216-17, that if '7 Up' had been used in Australia it would not have been open for the other party to claim statutory proprietorship of '8 Up'; but there is a suggestion also that this would have been on the further footing of 'clear piracy' or fraud.

Will substantial identity suffice? Or may questions of deceptive similarity be considered? Or is visual identity essential? This might be a practical criterion with word marks, but even then, is FUN SHIP to be differently regarded to FUNSHIP? The position would be even more difficult with device marks."

29. After considering The Shell Co of Australia Ltd v. Rohm & Haas (1949), 78 CLR 601, His Honour continued at p. 391at about Line 28 as follows:-

"When the decision is understood in this way, it does not supply any general authority for the proposition that in the case of disputed claims to proprietorship under the present statute anything less than substantial identity between the two marks will suffice. The phrase 'substantially identical' as it appears in s 62 (which is concerned with infringement) was discussed by Windeyer J in The Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414. It requires a total impression of similarity to emerge from a comparison between the two marks. In a real sense a claim to proprietorship of the one extends to the other. But to go beyond this is, in my view, not possible. There is, as Mr Shanahan points out in his work (p 158) real difficulty in assessing the broader notion of deceptive similarity in the absence of some notional user in Australia of the prior mark (something postulated by s 33) or prior public recognition built up by user: s 28(a).

In the present case there would, in my view, be no material distinction to be drawn between 'Fun Ship' and 'Funship' or between the addition of the definite article or the use of the plural. However, FUN SHIP is for this purpose a substantially different trade mark to SITMAR'S FUNSHIP and FAIRSTAR THE FUNSHIP."

THE RESPONDENT'S SUBMISSIONS ON PROPRIETORSHIP

30. Mr Liao submits that the Applicant's mark is "MILA SCH?N & "M" Device" whereas the Respondent's mark is "WOWI & "W" Device". He says that they are totally different marks and cannot in any way be said to be identical or virtually identical and that it would be wrong to single out the device parts of each composite mark for the purposes of comparison. His submission is that the marks have to be compared as a whole and this submission seems to be borne out by the Vamuta case and the Bodyline case already referred to.

31. Mr Liao further says that even if it be assumed, for the sake of argument, that the "M" device was used on its own, the comparison is nevertheless with the "WOWI & "W" device" mark which is the subject matter of the registration. And in this regard, he refers again to the Bodyline Cosmetics case, the Vamuta case and Sizzler. He concludes by saying that as the marks are not the same marks, nor, on the test subscribed to in the Australian authorities, are they virtually identical or even substantially similar, the Applicant's attack on proprietorship simply fails in limine.

32. Thirdly, Mr Liao submits that, on the basis of the Australian authorities, the question of proprietorship does not arise where the alleged prior use in Hong Kong of the Applicant for rectification is in respect of goods different from those in respect of which the mark is registered. Mr Garland urges me to apply these authorities sensibly and commercially, especially in the light of the market situation in Hong Kong. This I have sought to do.

33. On this point, Mr Liao refers to Sportscraft Consolidated Pty. Ltd. v General Sportcraft Co. Ltd. (1993) 27 IPR 74, where at p. 77, the Hearing Officer, Mr Forno said this at Line 24:

"There is no doubt that the words 'Sportcraft' and 'Sportscraft' are almost identical. I consider them to fall into the category of marks such as POLYKIN and POLYKEN, (Kendall Co v Mulsyn Paint & Chemicals (1963) 109 CLR 300), in their relationship to each other. If the applicant's and opponent's goods were of the same description, I would have no hesitation in agreeing that proprietorship of the mark resided with the opponent following its first and extensive use. However, the goods are not the same. The opponent's use of the mark SPORTSCRAFT has been restricted to class 25 goods, while the applicant has sought registration for SPORTCRAFT in class 28. None of the opponent's evidence shows that it has used the mark, or established a reputation, in the sales of sporting equipment, despite the early sales of jodhpurs as shown in Mr Hayes' declaration. I cannot accept that, because the opponent's goods may include items of clothing which could be referred to as 'sportwear', then this 'spills over' into class 28 to bestow ownership of the mark for sporting equipment."

34. On the facts, Mr Liao submits that it is not in dispute that the Applicant has never used its mark in Hong Kong in respect of lighters before the material date. The only alleged use is in respect of clothing items which, he says, are totally different from cigarette lighters.

35. Since Mr Liao says the goods are different, on this ground also, the Applicant's attack on proprietorship fails.

36. Mr Liao's fourth point is in relation to Hong Kong Caterers Ltd. v. Maxim's Ltd., [1983] HKLR 287. His submissions are helpfully summarised in his supplemental skeleton submissions at paras. 7-10 as follows:

"7. The decision of Hunter J. and particularly the statement at p.298F that it would be 'sufficient for an opponent to show that he enjoys an existing reputation in the mark applied for in relation to the relevant goods' can only be correct if 'reputation' is understood to mean 'goodwill'. In his judgment (pp.290G, 292A to 296A), Hunter J. reviewed the conflicting authorities and came to the conclusion (at 296A) that for both trade mark and passing off purposes, the existence in Hong Kong of a trading reputation was a question of pure fact to be determined on the evidence as a whole and did not depend on actual user in Hong Kong. In so concluding, he relied on Para.16-31 of Kerly on Trade Marks (10th Ed.)

8. Subsequent to his decision, the English Court of Appeal held in Anheuser-Busch Inc. v. Budejovicky Budvar N.P. & Ors.[1984] FSR 413 that what is protectable in a passing off action is goodwill as opposed to mere reputation in the United Kingdom by having a business carried on in the UK or having customers in the UK. The paragraph in Kerly relied upon by Hunter J. has now been revised in view of this decision - see Kerly (12th Ed.) Para.16-18.

9. In the context of proprietorship, the requirement of goodwill as opposed to reputation is clearly evident from the decision of the English Court of Appeal in Al Bassam Trade Mark [1995] RPC 511. In QUIET MAY Trade Mark [1966] FSR 27 the evidence established that the English applicants had a protectable goodwill.

10. On the evidence, the Applicant fails to establish any relevant goodwill in Hong Kong at the material date."

37. Mr Liao expanded on those written submissions by emphasising that before an applicant for rectification can establish the relevant goodwill, it has to show substantial business activity within the jurisdiction as of the material date.

38. Mr Liao thus accepts that, if he is correct, the Applicant for rectification in Hong Kong has to overcome more obstacles than his counterpart in Australia and possibly also in the United Kingdom.

CONCLUSIONS ON PROPRIETORSHIP

39. As far as this limited point is concerned, while I see the force of Mr Liao's submissions, I do not believe that it is necessarily correct to equate the goodwill necessary in a Passing Off action to the reputation required to challenge an assertion of proprietorship under section 13.

40. I bear in mind the Budweiser decision (Anheuser-Busch Inc. v Budejovicky Budvar N.P. & Ors., [1984] FSR 413) as now laying down the law that in a Passing Off action, the requisite concept is business goodwill and not simply reputation which may not have been acquired as a result of business activity within the jurisdiction.

41. True it is that Budweiser had not been decided as of the date of Hunter, J's judgment in Maxim's, but the lines of the authority upholding goodwill on the one hand and reputation in fact on the other were clearly before the learned judge who had no doubt which line he preferred.

42. Speaking for myself, on the question of proprietorship, I would adopt Hunter, J's reasoning and hold that an applicant for rectification may succeed in challenging an assertion of proprietorship by an applicant for registration by showing reputation in fact within the jurisdiction, even if such reputation was not derived from business activity within the jurisdiction.

43. But there has to be such reputation within the jurisdiction and evidence as to how such reputation spilt or flowed into the jurisdiction is necessary. There is practically no evidence of any such reputation on the papers, although there is a modicum of evidence as to some transactions prior to 1990 involving all told about 4,500 pieces of items of clothing and belts sold to an address in Caxton House. On the basis of the Australian cases to which I have already referred and Hunter, J's judgment in Maxim's at pp. 298-299, the small amount of user is not sufficient to deprive the Applicant of its right to challenge the Respondent's assertion of proprietorship. In other words, the user is sufficient to enable the Applicant to challenge the Respondent's claim to be the proprietor of the mark as registered, provided, of course, the other necessary conditions for such a challenge are fulfilled.

44. The same result was reached in opposition proceedings in The Kendall Co v. Mulsyn Paint & Chemicals (1962-63), 109 CLR 300, a decision of the High Court of Australia, where Kitto, J. gave careful consideration to a similar issue at p. 304.

45. But ultimately, in my judgment, the Applicant fails on the issue of proprietorship since the Australian authorities to which I have referred establish the necessity of an applicant for rectification showing virtually identical marks in respect of identical goods before such an application can succeed. Despite Mr Garland's cogent submissions that I should consider simply the device alone, I have not felt able to do so in the face of the Australian authorities which seem to me to make commercial sense and to be consonant with the general tenor and principles of trade mark law.

46. Mr Liao also took a further point that the Applicant had no reputation in lighters at all in Hong Kong as of April 1990 and refers to Maxim's at p. 298F. It is not necessary for me to express a view on this, but I do not read Hunter J's judgment in Maxim's as limiting a challenge to proprietorship by requiring reputation to have emanated from user of the same goods, but I need say no more on this topic.

THE ORIGIN OF THE RESPONDENT'S DEVICE

47. There was also a fair amount of discussion as to the provenance of the Respondent's device. I note that there is no evidence from the person who is alleged to have devised the design of the Respondent's device. This is a Ms Yeung and she has apparently refused to co-operate with the Respondent in these proceedings and has refused to file evidence before this Court. The fact of the matter is that there is no evidence as to from where she got the device or the idea. This is a significant omission. I say this because, although the onus is on the Applicant for rectification, where the devices as they ultimately became are so similar, a court can be forgiven for concluding that one is derived from the other unless there is acceptable evidence from the originator of the idea to the contrary. Nor is there an abundance of evidence from Mr Sugaya, the person who drew the final version of the Respondent's device, as to the instructions Mr Lam or Ms Yeung supplied to him. It would not be much of a stretch to conclude that the Respondent's device may well have been derived from that of the Applicant.

THE SIGNIFICANCE OF THE LACK OF CROSS-EXAMINATION

48. Mr Liao makes the fair point that, on these issues, I should not disregard the Respondent's evidence where there has been no cross-examination and no application to do so. I would naturally hesitate to make any such finding against the evidence affirmed to on behalf of the Respondent without cross-examination of the affirmants.

49. In Re Borsalini Trade Mark [1993] 1 HKC 587, Godfrey, J at p. 592B-F has this to say:

"As to honest use, I accept that it must be for an applicant who is seeking registration of a mark which is identical with, or nearly resembles, another to qualify for this privilege by proving to the satisfaction of the Registrar that his use of his mark is an honest use - he has, in my judgment, to offer a convincing explanation of his use of the mark. Mr Fox appears to have considered that Mr Wong's explanation in the present case as to how he came upon the mark Borsalini was unconvincing. Nevertheless, he concluded that it had been honestly come upon. I do not find this easy to follow, but that does not matter since I am entitled, and indeed bound, to decide the matter for myself. For myself, I propose to accept the explanation of Mr Wong as to how he came upon the mark. It was open to the appellant, in the course of the proceedings before Mr Fox, to ask for Mr Wong to attend to be cross-examined. Although this is unusual, in my judgment, a party opponent who intends to dispute the honesty of the applicant in proceedings of this sort would be well advised to do so. Except when the case is too plain for words, it cannot be right for any tribunal to decide questions of honesty or dishonesty on affidavit evidence, untested by cross-examination. If cross-examination is not sought, inferences of a deponent's dishonesty ought not to be drawn, unless irresistible. If Mr Wong had been alive at the date of the hearing before me, I would have intimated as much to counsel for the appellant, and given the appellant the opportunity, if it so wished, to cross-examine Mr Wong accordingly. But, of course, it was unhappily too late for this."

50. In the light of these observations, I feel quite unable to ignore the evidence of Mr Sugaya that he did not copy the Applicant's device. However, the lack of evidence from Ms Yeung, the alleged originator of the idea of the Respondent's device, stands on a different footing and there is simply nothing on which the Applicant could have applied to cross-examine. I note of course the Respondent's late evidence as to why Ms Yeung gave no evidence, but that does not really remedy the omission.

51. If this matter had been material, and this was Mr Garland's second limb of challenge on the proprietorship issue, and had I felt it necessary to decide the case on this ground, I would have inferred from the available, although limited, evidence that Ms Yeung must have had some, if only subliminal, recourse to the Applicant's device, given the similarities between the concepts between the two devices, even if the actual drawings she prepared and exhibited at p. 616 & 618 are not identical to the Applicant's device.

52. On the basis then of the foregoing, I find that the application to rectify the trade mark register based on section 13(1) of the Trade Marks Ordinance fails.

LIKELIHOOD OF DECEPTION

53. I go on now to consider the ground based on section 12(1) of the Trade Marks Ordinance. Section 12(1) of the Trade Marks Ordinance provides:

"It shall not be lawful to register a trade mark or part of a trade mark any matter the use of which would be likely to deceive or would be disentitled to protection in a court of justice or would be contrary to law or morality, or any scandalous design."

54. The test to be applied to the facts of this case was formulated by Mr Garland as follows:

"Having regard to the reputation or use of the Applicant's device in Hong Kong at the 11th April 1990, was use of the Respondent's device in a normal and fair manner in relation to cigarette lighters likely to cause deception amongst a substantial number of persons?"

This was Mr Garland's formulation based on Wellcome Foundation v. Otsuka [1989] 2 HKLR 365 at 367.

55. Mr Liao's formulation is somewhat different. This is how he puts it in his skeleton submission and it is convenient for me to refer to the relevant paragraphs which are 20, 21 & 22 as follows:

"SECTION 12(1)

20. The correct test to be applied to the facts of this case is:-

'Having regard to the reputation acquired in the Applicant's 'M' device mark in Hong Kong on 11th April 1990, is the Court satisfied that the Respondent's mark, namely the 'WOWI & W' device mark, if used in a normal and fair manner in relation to cigarette lighters, would not be reasonably likely to cause deception and confusion amongst a substantial number of persons.'

Even if the test is to be applied to the Respondent's 'W' device mark on its own, given the requirement that the mark must be considered when used in a normal and fair manner, the entire mark (incorporating the word 'WOWI') must be considered.

21. The Applicant is unable to prove that it enjoyed any reputation in its 'M' device mark in Hong Kong at the material time - see above. The evidence shows that it invariably used the 'M' mark in conjunction with the name 'MILA SCH?N' and accordingly, any reputation enjoyed by the Applicant at the material time would have been in the 'MILA SCH?N & 'M' device' mark, not the 'M' mark in isolation.

22. Even assuming the Applicant is able to prove reputation in its 'M' device mark, the Applicant is unable to prove that the use of the Respondent's 'WOWI & 'W' device' mark was likely to cause deception at the material time. The evidence shows that the Applicant's 'M' device mark was invariably used in conjunction with the name 'MILA SCH?N' whereas the Respondent's 'W' device mark has always been used in conjunction with the word mark 'WOWI'."

56. Mr Garland's retort is by reference to the express words of section 12(1) which refers to "a trade mark or part of a trade mark" and here, he says, the deception is caused by the use of the device which is part of the trade mark as registered. He goes on to say, by reference to the actual registration of the Respondent's trade mark at p. 242-243 of the Exhibits Bundle (1), that the comparison is between the normal and fair use of the mark as registered and points to the rather large device as against the word WOWI. So that even if, he says, Mr Liao's formulation is the correct one, the same submission is valid, given the prominence of the device as registered.

57. Again, although I see the force in Mr Liao's submissions, I am ultimately persuaded by Mr Garland that the wording of section 12(1) dictates that his formulation is the correct one, but I would not have found the requisite likelihood of deception even on Mr Garland's formulation since there is simply insufficient evidence before me of the Applicant's reputation in Hong Kong as of April 1990 to ground an argument of the Respondent's device being likely to deceive.

58. Mr Garland referred to Re Omega [1995] 2 HKC 473, at 479 where Deputy Judge Le Pichon (as she then was) said this :

"I accept Mr Yan's submission that s 12(1) does not require that the goods be 'closely allied'. It is stated in Kerly (op cit at 10-03) that s 11 of the UK Act extends to cases where the opponent's mark has been used only upon goods of a different description from those for which registration is sought. See also Players [1965] RPC 363 and Golden Jet [1979] RPC 19. Indeed, the learned hearing officer had, earlier in his decision (at para 58) correctly taken this view of s 12(1).

Mr Faux concluded (at para 118) that no one would think of pens when seeing the opponent's marks or hearing its name. That, with the greatest respect, is not the question. The real question is what would people think if they see the applicant's pens with the suit mark?

I am satisfied on the evidence and in the light of all the factors referred to above that the use by the applicant of the suit mark in a normal and fair way would lead to deception and confusion. I do not agree with Mr Faux's finding that watches and pens would not normally be sold through the same trade channels. The evidence which relates to the market for luxury goods, into which category the opponent's goods unquestionably fall, is otherwise."

59. These observations I bear in mind, but the evidence to which I have already referred consists of no more than 4,500 pieces sold to one address in Caxton House without any further evidence of other retail sales. The worldwide sales and advertising figures start from 1990 with no breakdown for Hong Kong. Promotional material are not shown to have been circulated in Hong Kong apart possibly from an issue or issues of a Singapore Air Line in-flight magazine. There is simply far too little to go on to show the necessary reputation to ground a case of likelihood to deceive.

60. Since I have found against the Applicant on both grounds, there is no question of the exercise of any discretion, and I would simply dismiss the Applicant's application to rectify the register.

61. Before I ask both of you to address me on anything else, may I thank both of you and your juniors for some very helpful and interesting oral and written submissions.